Family Leadership Development and Succession

16 November 2018

Family businesses are a unique operation. Therefore, they need a unique way of developing leaders and succession planning. There are many ways to do this, but not all of them capture the unique needs of families. Theory suggests there are four phases to any successful family leadership and succession plan.

The first phase is all about learning business in general. It could be ensuring that the next generation have their own outside business skills that they can bring into the business. Perhaps a legal or accounting degree, an MBA or a trade. This will bring them credibility when they re-enter the family business and not just seen as “the bosses’ daughter”.

The second phase is about learning the intricacies of “our” family business. How does this family run the business and what is uniquely special about it? It’s about building industry specific knowledge that will help grow and lead the business into the future. It’s about getting known in industry circles and showing that you can apply the phase 1 knowledge to the family business.

In phase 3, it is about learning to lead the family business. This is about the transfer of knowledge and trust to the next generation. This transition is often the most difficult. It requires the transfer of knowledge of running the business both strategically and operationally and often ties closely with phase 4.

Phase 4 is about learning to let go. This is the outgoing generation learning to let go of the torch and handing it over to the next generation. This might mean giving them another purpose – perhaps running the philanthropic activities of the family or running the family council. Without this phase, the next generation will not feel empowered to run the business in an effective way.

The above model is referred to as the 4L’s of family business. A model developed by Moores, Barrett and Craig in 2003. The model is still referred to today as a key way of managing succession and ensuring its success.

Things for family businesses to think about, include - thinking about who is in what quadrant at what time, managing any overcrowding of quadrants and ensuring there is a succession through the quadrants. There is no one key element that defines success for a family business transfer, but this is indeed a good start.